BARCLAYS: 6 charts that show how Britain's 'DIY recession' is playing out

The UK economy is likely to experience reduced spending, lower house prices and higher unemployment as part of a self-inflicted, "do-it-yourself" recession as a result of leaving the European Union, according to analysts from Barclays.

Barclays analysts Fabrice Montagne and Andrezj Szczepaniak said in a note to clients on Wednesday: "We expect the UK to enter a recession in H2 16, driven by spiralling uncertainty on the back of the vote to leave the EU, forcing both households and firms to hold back on spending.

They're not the only ones to think the UK may have shot itself in the foot when voting to leave the European Union in June. The International Monetary Fund slashed its forecast for UK economic growth on Tuesday, saying the vote to leave the European Union has “thrown a spanner in the works” of the global economy.

The IMF shaved off 0.9 percentage points from its previous economic forecast for the UK, estimating growth of 1.3% in 2017.

Economic and political uncertainty is having a chilling effect on investment, hitting credit demand, hiring and house prices.

Business confidence took a tumble after the referendum result.

Barclays

"An IoD survey, conducted 25-26 June, shows that 65% of businesses believe the outcome was “negative” for their organisation, with about 36% believing it would result in decreased investment and 24% saying they would freeze hiring."

Public companies are borrowing less, despite low interest rates, pointing to a slow down in investment spending. Demand for credit hit levels last seen in 2009.

Barclays

"The Q2 16 Bank of England Credit Conditions Survey showed that demand for lending among large public, non-financial corporations has declined markedly, falling to -32.8 from -3.3 in Q1 16; demand for credit was only marginally lower at the start of the financial crisis."

Consumer confidence also plunged following the Brexit vote, faster than analysts expected.

Barclays

"This pessimism is corroborated by the weekly YouGov consumer confidence survey, which showed that, post-referendum, confidence fell to a three-year low in just one week. While it stood at 111.9 points during 1-23 June, it dropped to 104.3 during 23-27 June, just days after the vote."

The housing market is already beginning to feel the knock-on effects.

Barclays

"House price expectations according to the June RICS survey declined markedly, dropping to -27.0 from -10.6 (Figure 6). This is likely to act as a drag on household consumption."

Inflation will rise, driven in part by a weaker pound pushing up prices for imports.

Barclays

"In our view, fixed investment will face an immediate and abrupt adjustment, falling 1.4% in 2016 and 2.6% and 2017, after having risen 3.3% in 2015."

All this economic and political uncertainty will have a chilling effect on investment, both domestic and foreign, leading to an avoidable economic downturn.

Barclays

"In our view, fixed investment will face an immediate and abrupt adjustment, falling 1.4% in 2016 and 2.6% and 2017, after having risen 3.3% in 2015."